DeFi Pulse stands as one of the most popular platforms out there when it comes to the analytics of DeFi tokens. On Monday, the platform announced that it has successfully launched its own form of DeFi index, having been built within the Set Protocol’s V2 infrastructure.
1/ 🍇 Introducing The DeFi Pulse Index 🍇
— DeFi Pulse 🍇 (@defipulse) September 14, 2020
Easing The Learning Curve
In its announcement, DeFi Pulse explained that many a person’s first steps into the crypto space start with a simple google search, or maybe even a tweet asking crypto twitter to guide you. The announcement described the path of learning the various ins and outs of DeFi as a treacherous one and highlighted how it could simply be far too much for certain people to handle. This is due to the many different terms, concepts, and protocols that people need to learn, making the so-called learning curve for DeFi far too much for a lot of people to comfortably get into.
Highlighting new users often seek a reliable, safe shortcut into the DeFi space, which prompted DeFi Pulse to launch the DeFi Pulse Index: A novel financial product aimed at lowering the entry barrier for various new users. These users simply lack the expertise to gain exposure to the DeFi space in such a way to keep them safe, and at the same time allows these users some experience with DeFi exposure, doing so through a single asset.
Detailing The Index
The DeFi Pulse Index stands as the first index of its kind, according to DeFi Pulse, and is an index of various decentralized finance tokens. DeFi Pulse promised in its statement that this isn’t some sort of derivative or synthetic asset, but rather direct ownership of the various tokens that consist of this capitalization-weighted index.
As it stands now, ten tokens will be used for the index at launch, making use of a capitalization-weighted index. This means that the value weight of every DeFi token is measured off of the market cap, with the data itself being derived from the go-to crypto data provider, CoinGecko. This price, in turn, was multiplied by the circulating supply, to determine the circulating market cap. After all that was sorted, each token gets weighted by way of its circulating market cap in relation to other positions in the index.
The Tokens In Question
The ten tokens listed at launch are as follows: LEND, YFI, COMP, SNX, LRC, MKR, KNC, REN, REPv2, and BAL.
This Index isn’t set in stone, however, with the announcement explaining criteria for various DeFi tokens to qualify to be listed within the Index. This stands as a massive step forward for the DeFi space at large, and will doubtlessly help push the crypto space into the mainstream sector of finance.